Jessica Fino 28 Feb 2017 02:43pm

Utilising BME talent could give economy £24bn boost

Equal career progression for black and minority ethnic (BME) employees could boost the UK economy by £24bn, a government-backed report into race in the workplace has found

In a review into the career progression of BME workers commissioned by Sajid Javid, the former business secretary, Baroness McGregor-Smith said that only 14% of the working age population come from a BME background.

McGregor-Smith, who led the review, said that there is a “structural, historical bias that favours certain individuals” in the UK workplace “at every stage of an individual’s career, and even before it begins”.

As a result, the report called on UK companies to start publishing a breakdown of their staff by race and pay, as well as publishing their long-term diversity targets and urged them to report their progress annually.

McGregor-Smith said, “Until we know where we stand and how we are performing today, it is impossible to define and deliver real progress.

“No company’s commitment to diversity and inclusion can be taken seriously until it collects, scrutinises and is transparent with its workforce data.

“This means being honest with themselves about where they are and where they need to get to as well as being honest with the people they employ.”

The report found that the employment rate for ethnic minorities stood at 62.8% in 2016, compared to 75.6% for white workers. It also found that all BME groups were more likely to be overqualified than white ethnic groups, but white employees were more likely to be promoted than all other groups.

It also found that one in eight of the working population are from a BME background, yet only one in ten of them are in the workplace. Furthermore, only one in 16 top management positions are held by a BME worker.

In terms of opportunities for progression, 35% of Pakistani, 33% of Indian and 29% of black Caribbean employees reported feeling that they have been overlooked for promotion because of their ethnicity.

The review published several recommendations. It urged listed companies and all businesses and public bodies with more than 50 employees to publish five-year aspirational targets and report against these annually, along with making them publically available.

The government should legislate to ensure that these companies and businesses publish the workforce data broken down by race and pay band, the review said.

It should also work with organisations to provide a free unconscious bias resource online and employers should ensure staff undertake this training. Executives should also take unconscious bias workshops.

However, Margot James, the business minister, wrote to McGregor-Smith saying that, in the first instance, the best method would be a “business-led, voluntary approach”, rather than “legislation as a way of bringing about lasting change”.

James said, “We therefore believe a non-legislative solution is the right approach for now, but will monitor progress and stand ready to act if sufficient progress is not delivered.”

She added, “We will continue to look at other ways in which we can improve diversity in our supply chains but in the meantime, we hope all employers will take our lead and do what they can to improve their contracts to encourage greater diversity.”

The review said that companies should identify a board-level sponsor for all diversity issues, and consider diversity as a key performance indicator. Reverse mentoring was also encouraged, so senior leaders and executive board members understand the positive impact diversity can have on a company.

It also called on companies to challenge school and university bias, use relevant and appropriate language in job specifications, use diverse interview panels, and make sure they use contracts and supply chains to promote diversity.

Businesses should also establish inclusive networks and provide mentoring and sponsorship schemes internally.

Neil Carberry, director for people and skills policy at the Confederation of British Industry, said, “Creating inclusive workplaces where employees are able to feel welcome and fulfil their potential regardless of their ethnicity is not only the right thing to do, these businesses are more productive and innovative too.

"Effective leadership and management taking concrete steps to improve opportunity, as well as sharing positive experiences amongst firms is essential.

“As this review points out, companies must take the lead to make a real difference and many are already making progress. Greater transparency is a key part of this but it’s important that that we take a business-led approach to plans, targets and reporting systems, rather than a regulatory one.”

The report named three of the Big Four firms as some of the best practice case studies. EY, KPMG and PwC were identified as firms that have implemented initiatives which delivered real change in the workplace.

EY was praised for its inclusive leadership programme and promotion policies, while KPMG was recognised for its people development through its talent development programme GROW.

PwC was also mentioned thanks to its initiatives to include and support talent after it removed UCAS scores as entry criteria for graduate roles and created its Back to School programme.

Laura Hinton, head of people at PwC, said, “While progress has been made on addressing females’ progression in the workplace, we need to ramp up the focus and action on ethnicity.

“We need to broaden thinking on diversity and move away from targeting initiatives at certain groups and instead focus on making sure our workplaces are inclusive and fair for everyone.

“We recognise that to really shift the dial, we need to create a culture where people feel comfortable discussing race so that we can understand the barriers and make the changes needed.”

Meanwhile, David Isaac, chair of the Equality and Human Rights Commission, said that the government must produce a comprehensive race strategy to tackle all the interrelated issues that hold people back.

“Without such an approach we are worried that divisions will continue to grow,” he said.

Frances O’Grady, Trades Union Congress general secretary also said that, without government action, racist discrimination at work “won’t simply disappear”.

“Ministers must act on the report’s recommendations, including requiring companies with over 50 employees to publish data on race and pay.

“Racism and discrimination at work won’t be eliminated by talk – it’s time for business and the government to act.”